Industry Success Stories
Oilfield ServicesMeeting rapidly changing customer requirements in the oilfield is your focus. Building strong Accounting & Finance, Risk & Compliance, and Business & Technology capabilities can help you control your costs and increase profitability.
Helping a PE firm evaluate a target acquisition
A private equity firm was assessing a potential acquisition of an oilfield services company. The target company's financial reporting needed cleaning up to properly understand the current situation. And, it was expected that restructuring would be required to unlock value. The PE firm came to Aventine Hill Partners for assistance in performing due diligence.
One of our CFO Advisors highly experienced in growth and turnaround modeling and energy-related industries began collaborating with the PE firm to perform a detailed analysis of the potential acquisition. The work began on-site at the target company by assessing the current state of accounting operations and records. Financial information was extracted and restructured to enable a rigorous quality of earnings analysis. Detail analysis of cash flow was performed.
Once financial reporting and analysis of the current state was considered reliable, modeling was performed to forecast the impact of specific business improvements on revenue, costs, earnings, and cash flow. Pro forma financial statements were created under multiple scenarios and presented to PE firm decision-makers. Iterations to the model were prepared based on additional options the PE firm could consider. Ultimately, a final analysis package of this potential acquisition was delivered to the PE firm for use in their investment decision.
With assistance from Aventine Hill Partners' CFO Advisory services, this PE firm received an objective analysis by a CFO experienced in the target industry. The work was completed in less than a month allowing the firm to make a fully informed decision quickly and cost effectively.
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Providing a fractional CFO to resolve urgent challenges
An oilfield services company was experiencing severe cash flow challenges. The CFO resigned so there was an urgent need for strong financial leadership to re-establish control of working capital and cash. One of the private equity owners came to Aventine Hill Partners for assistance.
One of our Accounting and Finance Practice Directors assessed the situation and determined there were more challenges than just negative cash flow. The company was also behind on filing its taxes. The Practice Director stepped in as hands-on CFO on a part-time basis to make changes quickly and avoid bankruptcy.
Analysis of cash flows indicated that billing frequency needed to be accelerated and A/R collections needed to be more aggressive. To motivate the accounting team members, measurable goals were set with cash bonuses tied to achieving the goals. The accounting team embraced the changes and DSO was reduced from 180 days to 15 days. Cash forecasting and cash management processes were implemented to sustain the improvement.
Concurrently, our CFO consultant led the accounting team in cleaning up financial records and catching up financial statement reporting for the prior two years. These were used to bring all tax filings current.
Last, recommendations were made on how to train the existing staff to sustain the improvement. With the company balance sheet stable and accounting processes in place, it was determined that a full-time CFO was not needed.
The accounting team received bonuses for cleaning up DSO. The company avoided bankruptcy. The private equity firm that requested our assistance was able to sell its ownership share. Learn more about our CFO Advisory services.
Stepping in to provide IT strategy and business support
Oilfield Services | Aventine Hill Partners
Investors created a new company by purchasing small oilfield services companies in major production basins with a vision to create a more integrated set of services that could be optimized and grown organically and through further acquisitions. The company had a CFO and Controller but no IT personnel. An Aventine Hill Partners’ CIO Advisor was engaged to develop recommendations for an IT strategy to support the business strategy.
The CIO Advisor visited the company’s operations to see how similar and different the acquired businesses were and what software was currently used. Next, a roadmap was developed that focused on three priorities. First, define what was required to consolidate accounting for the acquired businesses to support the IPO and faster, more accurate reporting to manage the business. Second, describe what level of automation in the field would be most directly beneficial to optimizing the business and gain synergies. Third, areas for optional future investment were identified.
Using the priorities, the CIO Advisor developed high-level options for a new ERP platform with associated benefits, costs, and risks for each. The CEO and CFO of the company were then able to understand and weigh the trade-offs to map out an IT investment strategy that best fit with their goals and capital plan.
Aventine Hill Partners’ CIO Advisory services provided this company with an ERP roadmap that it could implement when ready. Having access to a highly experienced CIO on a part-time basis allowed this company to plan and budget like the larger company it will become while being cost effective for the smaller size it is now. Learn more about our ERP Selection and Optimization services.
Readying a private company to become public
Private equity investors and senior management of an oilfield services company defined a strategic roadmap for creating a publicly traded diversified energy services company. A critical step in the roadmap was to perform a strategic transaction to bring a profitable, privately held company into a pre-revenue public shell. They came to Aventine Hill Partners advisory services group for assistance.
We provided a CFO Advisor to lead a public company readiness assessment utilizing experts in each Aventine Hill practice area. Interviews and direct observations were performed to identify gaps between public company requirements and the current accounting policies, processes, controls, & systems capabilities. Cost-effective improvement plans were defined for each gap.
To implement the improvement plans, our CFO Advisor provided interim support to the CEO and CFO who did not have public company experience.
- Accounting policies, procedures, and controls were updated and training provided to both leadership and staff personnel. This included supporting international requirements as the company was expanding outside the U.S.
- Due diligence requirements were defined for multiple acquisition and merger scenarios that were mapped to occur over multiple quarters.
- Consolidations of U.S. and foreign entities were performed giving management better visibility across all operations.
- Financial and key performance metrics reporting to support Board oversight were defined.
- The month-end close process was restructured and a formal schedule of tasks created that allowed for completing the close faster.
- Audit preparation was performed to assure readiness for the external audit of the operations that previously were unaudited.
- Human resources policies and procedures were implemented to improve role clarity among personnel and mitigate potential personnel risks.
Thanks to the assistance of Aventine Hill Partners, this company successfully completed its transition to public company reporting and implemented the accounting capabilities it required to operate as a public company. Importantly, the changes were implemented so that the company is more efficient now with its public requirements than before as a private company.
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- CFO Advisory services
- M&A Transaction Support
- Accounting and Finance capabilities
- Risk and Compliance capabilities
Helping an ERP Project get back on track
A large, publicly traded oilfield services company was implementing a new ERP system. The accounting and finance scope was behind schedule and the company sought additional consulting support to get the project back on track. They came to Aventine Hill Partners for help.
A CIO Advisor with deep expertise in ERP implementations and broad accounting knowledge was provided to initially assess the status of the project and recommend actions. Areas requiring significant course correction were the lack of a reporting solution and a cut-over plan that would result in excessive business disruption.
The CIO Advisor led the effort to select reporting software that would meet financial and management reporting needs while being consistent with IT standards and budget. Next, the Advisor led the effort to define detailed requirements for financial and operational reports and managed the creation of the reports. As the architect for the reporting solution, the Advisor personally performed testing of critical functionality and also trained users on how to create reports.
The Advisor actively participated in the redesign of the cut-over plan. Using experiences from numerous past projects, the draft plan that initially proposed over two weeks system downtime was reduced to an acceptable duration. The Advisor also defined metrics to assure the progress and quality of the cut-over could be monitored and adjustments made if exceptions were noted. The cut-over was successful.
During the burn-in period after go-live, master data and configuration errors were identified. The Advisor led efforts to analyze the problems and identify the root causes so appropriate solutions could be identified. The Advisor actively participated in verifying the design changes were on point and were implemented accurately.
The company asked the Advisor to remain on the project until they completed their first quarterly close. The close was successfully completed.
This company was experiencing material risks to its ability to operate and meet its accounting requirements due to their ERP project. With the assistance of a highly experienced CIO Advisor, critical problems were addressed both prior to go-live and during the burn-in period after go-live. The company was able to maintain operations and prepare its quarterly financial filings on schedule using the new ERP system.
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Helping companies make informed financial decisions
A large oilfield services firm operating in the Eagle Ford Shale play came to Aventine Hill Partners with several issues in Finance, Accounting, and Tax. The company was unable to analyze job costs or generate periodic financial reports to allow management to make informed decisions. There were also questions surrounding the accuracy of multi-state sales tax payments. Because of the cross-discipline nature of the challenges, the company chose to engage Aventine Hill Partners’ CFO Advisory services.
The CFO Advisor's first task was to perform an in-depth analysis of how job costs were categorized in the existing Chart of Accounts. Changes were recommended that improved the accuracy and specificity of job cost accounting. New, more accurate financial reports were defined based on the improved Chart. These reports were able to be generated on a monthly basis and began providing senior management with a more complete picture of job and indirect costs.
Through a thorough review of sales tax regulations in states where the company was operating, we identified and implemented improvements for monthly sales tax reports and payments. Our efforts resulted in a significantly reduced risk of inaccurate payments or fines.
After making these improvements, we assisted the company in recruiting and training a new senior-level accounting employee.
Aventine Hill Partners was able to provide cost-effective, executive-level consulting to make dramatic improvements quickly and put in place ongoing support to cost effectively maintain the sustainability of those improvements. Learn more about our Accounting and Finance capabilities.
Creating a Foreign Corrupt Practices Act (FCPA) training program
An oilfield services company expanded internationally and was faced with new regulatory requirements and risks. The company wanted to understand the Foreign Corrupt Practices Act, separate fact from fiction, and implement a best-in-class compliance program world-wide. They turned to Aventine Hill Partners for help.
One of our CAE Advisors met with company management to understand their concerns. They had heard stories of other companies receiving advice that resulted in costly over-compliance activities and practices. The Advisor quickly assessed the overall business and control environment along with the corruption perception index for each country the company operated in or had nexus. This resulted in a roadmap for creating an FCPA training program tailored to this company's business. A detailed analysis was performed on key risks areas such as third-party intermediaries, cash-out processes, travel and entertainment, contributions, and gifts.
The resulting FCPA training program covered such items as:
- FCPA current events to provide real world context
- A summary of the law for easier understanding, including federal sentencing guidelines
- Case studies to describe how the law is applied
- High-risk areas and processes applicable to this company
- Best practices for maintaining an effective compliance program
- Tests to assess knowledge.
The Advisor provided onsite training to employees in the U.S. The training was video-recorded for use globally, for new hires, and as an annual refresher. Company management participated in the training helping the Advisor educate employees about situations specific to the company and hypothetical scenarios that may arise.
With help and leadership from Aventine Hill Partners, this company was able to successfully implement and maintain a best-in-class FCPA compliance program tailored to their business and budget. Learn more about our Regulatory Compliance support.
Project and Interim Solutions
Providing on-demand expertise for a higher-quality, more cost effective accounting capability
A $300+ million revenue oilfield services and parts supplier achieved rapid growth as the Eagle Ford shale play took off. They experienced "growing pains" and desired periodic assistance to expand their accounting and finance capabilities without increasing permanent headcount. They came to Aventine Hill Partners for assistance.
Utilizing our Project and Interim Solutions services, we provide diverse expertise on-demand to address busy periods and occasional challenges that are a consequence of fast growth.
- As transaction volumes increased, their bank and account reconciliations became more intensive and were not being kept up to date. One of our accounting and finance consultants stepped in to bring the reconciliations current and recommend improvements. As an ongoing solution, our consultant assists with the reconciliations a few days each month to assure that the company's cash and balance sheet reporting is always current and accurate.
- Because this company sells a diverse number of parts and their customers' needs change frequently, their inventory accounting was becoming more complex. We provided an inventory accounting consultant to analyze the current procedures and recommend improvements. New procedures were implemented that optimized the process going forward and a clean-up project was performed to resolve past inconsistencies. Once the accounting was improved, additional work was undertaken to clean-up the master data for all parts to eliminate unnecessary records that made work more difficult for purchasing and warehouse personnel.
- The company was assessing whether to outsource payroll. One of our consultants who had experience with multiple payroll providers and their capabilities assessed the company's unique needs and reviewed the vendor proposals. Critical gaps were identified between the company's requirements and the proposed services. The company decided to continue running payroll internally and avoided a risky and costly project that would not have met all their needs.
- With the increasing accounting complexity and banking requirements, the company determined that an audit by a CPA firm was necessary. An Aventine Hill accounting and finance consultant with expertise in supporting external audits was provided. Our consultant helped the accounting team ready for the audit and then served as the liaison with the CPA firm.
ResultsThis fast growing company is able to deploy an accounting and finance function that utilizes a small full-time employee staff supplemented on-demand by Aventine Hill consultants who have a variety of experiences and expertise. They have not only kept up with their growth but improved their efficiency, control, and compliance while doing so. Learn more about our Accounting and Finance capabilities.
Providing on-demand tax expertise and achieving tax savings
A private equity backed oil and gas technology company reduced its corporate footprint in response to challenging business conditions. No longer having a Tax Department, but believing that tax optimization opportunities existed, they came to Aventine Hill Partners for help.
We initially provided a tax accounting consultant with public accounting and legal experience to assess the company’s overall tax situationOur consultant reviewed the company’s business model and operations to understand which taxes and jurisdictions were most important to focus on. Next, the work performed by the CPA firm preparing the tax returns was analyzed to identify any filing or compliance gaps that might exist. The scope included:
- Income tax reporting in multiple countries and US states
- Sales and use tax reporting in multiple states
- VAT/GST in multiple countries
- Property taxes in multiple countries, and
- Monthly/quarterly tax provisions.
After the initial assessment, our tax consultant filled in as the part-time Tax Director during the remaining calendar year to ensure the company was in compliance in preparation for tax season.
As annual tax season approached, the company concurred with a recommendation that a full-time Tax Director was required to begin generating bottom line value from improved tax strategies and ensure tax audits were completed efficiently. However, the company did not feel there was sufficient time to hire the right employee quickly enough.
To fill the Tax Director role on a full-time, interim basis, we provided a tax consultant with decades of oil and gas industry and corporate experience. Providing a different skillset better enabled the company to move from compliance mode to an optimization focus. New tax strategies specifically relevant to the countries of operations and industry were developed and implemented. Tax savings were quickly realized.
Thanks to Aventine Hill, this company gained access to the right tax expertise at the right time to ensure compliance and realize savings that impacted the bottom-line. The flexibility to utilize different consultants with different skillsets on a part-time then full-time basis was an efficient use of the company’s investment in outside expertise. The tax savings realized have already exceeded the investments made and the tax strategy changes will continue to realize savings in the future.
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Performing purchase accounting for an acquisition within tight deadlines
A large oilfield services company was being acquired by a private equity group. The company and PE team did not have the required expertise or available resources to perform purchase accounting reconciliations and adjustments within the required deadlines. They came to Aventine Hill Partners for assistance.
We provided Accounting and Finance professionals highly skilled in purchase accounting and the detail analyses required to recommend accurate adjustments. Expert oversight from our Practice Director addressed the most complex issues and assured clear communication among the various stakeholders who would review and approve the adjustments.
The pre-sale balance sheet of the company being acquired was in need of reconciliation and a complex purchase agreement also required multiple working capital adjustments to be computed to support the sale.
Every balance sheet account was reconciled and adjustments recommended with detail support for both timing and GAAP adjustments. The team validated all changes with the purchase agreement.
After collaboration with the outside valuation company, the opening balance sheet was developed. This required new asset depreciation schedules and intangible amortization to be set up for the new company.
The closing balance sheet was reconciled with all purchase price adjustments in advance of the 60 day deadline. This included support needed to be reviewed by an outside third party.
The third party reviewed the documentation provided by Aventine Hill Partners and agreed with the list of adjustments for both the GAAP adjustments and the adjustments due to the purchase agreement.
Supported by the expertise and sense of urgency from Aventine Hill Partners' Accounting and Finance consultants, the company and private equity firm were able to complete all accounting for this strategic transaction within the required deadlines and cost effectively.
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